The Links between the Environment and Competitiveness

Project partners:

Centre For Research on Energy and Environmental Economics and PolicyWuppertal Institute for Climate, Environment and EnergyEnvironmental Policy Research Centre (FFU)Adelphi Consult GmbHIEEP London – Institute for European Environmental Policy, London

Project description:

The project aims at studying the links between environmental policies and the competitiveness of companies and industries. Competiveness in general is defined by the European Union as a “sustained increase in real incomes and in standards of living and employment“. At the level of companies and sectors it focuses on “price and cost developments of production and other parameters potentially affecting the growth performance, market shares and investment and location decisions of firms in the regulated sectors".

In general terms, the project will focus on assessing if and how a better environmental performance, especially when it is achieved by way of higher resource productivity (energy efficiency, water saving, etc.) does really translate into tangible and verifiable advantages on the competition arena. This will imply some further objectives, concerning the dynamics of these effects, such as:

How a policy measure can generate drivers for resource productivity

How these resource productivity affects the production function (e.g.: costs of inputs) and, more in general, on the most relevant aspects of competitiveness

How a different performance in terms of resource productivity can originate a competitive advantage / disadvantage with respect to internal or international competitors

The methodological approach applied in the project aims at enriching the ongoing debate on the links between environment and competitiveness by way of a thorough and in-depth assessment, on one hand, of the effects of environmental policies on competitiveness and, on the other hand, of the impact of environmental performance on the companies and sector competitive performance.

To achieve this goal, first of all, the approach considers different typologies of instruments for environmental policies and proposes a focus on a particular policy area (water policies) to better understand the relationship between the implementation of these instruments and the dynamics by which they can influence the industry economic and competitive performance. In this respect, the main instruments for water resources management and protection that will be considered are the following:

1) pricing policies2) instruments to regulate point sources3) instruments to regulate water abstraction4) instrument to promote best environmental practice in industrial water use

Second, the project aims at evaluating if the positive environmental effects of policies are really able to influence the competitive performance of the interested companies.